Open Banking is a new way for businesses to accept payments that bypasses card networks entirely. Lower fees, simpler settlement, and more choice for your customers at the counter. Whether you run a café, a retail store, or a service business, here’s what you need to know.
What is Open Banking?
Open Banking is a system that lets customers pay directly from their bank account instead of using a card. When a customer pays this way, the money moves straight from their bank to yours — no Visa, no Mastercard, no card network in the middle.
In New Zealand, the major banks — ANZ, ASB, BNZ, Kiwibank, and Westpac — all support Open Banking payments. The system is regulated, secure, and live today. You don’t need to set up anything with the banks directly — platforms like tapara handle the connection for you.
How does a bank-to-bank payment work?
A bank-to-bank payment through Open Banking is straightforward. Here’s the typical flow from the customer’s perspective:
- The customer chooses to pay via their bank at checkout.
- They’re redirected to their own bank’s app or website.
- They authenticate using their bank’s security — Face ID, fingerprint, or password.
- They review the payment details and confirm.
- The money moves directly from their bank account to the merchant’s bank account.
There’s no card number involved, no card network processing the transaction, and no terminal required. The payment travels on banking rails, not card rails.
What does this mean for fees?
When a customer taps their card, the payment passes through several companies — the card network (Visa or Mastercard), the customer’s bank, and your payment processor. Each one takes a cut. Even with recent interchange fee caps, the total cost of accepting a card payment still adds up — especially for small businesses processing high volumes of small transactions.
An Open Banking payment skips all of that. The money moves from the customer’s bank directly to yours. No interchange fee, no card network fee, no processor margin. The result is a payment that costs a fraction of what a card transaction does.
Is it safe?
Yes. Every payment requires the customer to approve it directly through their own banking app — using Face ID, fingerprint, or their bank password. No one else ever sees their login details or has access to their account.
No card number is shared or stored at any point. There’s nothing to be stolen or compromised. The customer confirms each payment individually through the app they already trust — their bank.
Is it catching on?
Open Banking payments are live today and adoption is growing steadily. As more customers get comfortable paying from their bank account — rather than reaching for a card — businesses that offer the option are seeing real take-up. It’s especially popular for everyday purchases where card fees eat into thin margins.
Does this replace cards?
No — it gives your customers another option. Some will prefer paying from their bank, especially when they know it helps the businesses they support. Others will stick with cards out of habit or because they want the credit facility. Both are fine.
The point isn’t to stop accepting cards. It’s to give customers a choice — and to give yourself a lower-cost option for the transactions that would otherwise eat into your margins.
What tapara does
Tapara uses Open Banking as its payment rail. Merchants on the platform accept bank-to-bank payments at near-zero fees — no terminal required, no card network in the middle. Customers pay by scanning a QR code or tapping an NFC pad, then confirming through their own banking app.
To learn more about how Open Banking works on tapara, visit our Open Banking page. If you’re a business ready to get started, head to Businesses to find out how to join the platform.